"I would not touch bonds with a barge pole, especially government bonds. After 40 years of unending fiat money expansion, the world suffers from excess levels of debt. A lot of this debt will never be repaid. My expectation is that the market will increasingly question the ability and the willingness of most states – and that, crucially, includes the big states – to control their spending and to shed their addiction to debt financing.

"What happens to high-spending credit-dependent states when the market loses confidence in them has been evident in cases such as Ireland, Portugal and Greece? Among the big financial calamities of 2011 were notably government bond markets. Perversely, some of the big winners of 2011 were also government bond markets."

One of the mainstream media CIA propaganda operations recently published an article titled Seven Reasons to Sell Gold As we have recently documented the mainstream media has continued, if not increased, their attacks on gold while embracing bitcoin. We find this fact strange for a number of reasons. What we also find interesting is the internet only news websites don’t see this as a warning sign that something is probably out of balance. In the past the mainstream media has been used, to a degree, to measure the depths of falsehoods being spread. This does not apply when it comes to bitcoin as it has become the darling of most internet only news websites. We don’t trust bitcoin any more than we trust the mainstream media that sold their soul to the CIA decades ago.

BIS Surprises Gold Market Participants Eric King: “James, I wanted to talk about the BIS (Bank for International Settlements) mobilizing all of that gold. As you know, the bullion banks, who act as agents for Western governments, were heavily shorting the gold market. And you were saying there were large backwardations in gold and silver, Maguire was talking about how they were getting overrun in the physical market. And then all the sudden the BIS mobilized all of that gold and the smash in the gold and silver markets began. Can you talk about that?”

James Turk: “Yes, we’ve seen this so many times, Eric, that you almost have to expect it. When there is panic behind the scenes by the bullion banks and the governments that are trying to cap the gold price, they go to the vault and they pull out some bars that haven’t seen the light of day for probably decades and then ship them over to Asia. And this just happened again…

Even though we've tried to warn and prepare, none of that makes the inevitable Spec wash-and-rinse any easier to watch.

At the end of the day, it just is what it is. The year 2017 has unfolded almost precisely as we initially forecast back in January with two steps back following every three steps higher. We had carried a target of new highs for 2017, near $1320, through this most recent rally that began on July 10. That we instead reached $1360 was just a bonus, I guess.

From here and with Bank NET short positions hitting extremes over the past two weeks, we must expect further downside as Specs continue to be washed out and USDJPY/CDG reacts negatively to any hint of positive economic news that serves to reinforce Mother's hogwash of yesterday. As we discussed in yesterday's podcast, this period of frustration could very well last all the way through the next BLSBS two weeks from tomorrow. Once that's behind us...and hopefully haven't fallen too far from here...the stage will be set for the final three-steps-forward part of this year's pattern.

Strip an economy of capital, productive incentives, talent and yes, ethics, and what are we left with? An economy spiraling toward an inevitable collapse. Financialization is destroying the real economy, but few in power seem to notice or care. The reason why is painfully obvious: those in power are reaping vast fortunes from the engines of financialization--for example, former President Obama:Obama Goes From White House to Wall Street in Less Than One Year. This is not to single out President Obama as a special case; politicos across the spectrum depend on the engines of financialization to fund their campaigns and make them multi-millionaires, and corporate managers and financiers have skimmed billions of dollars in gains not from producing new, better and more affordable goods and services but by playing financialization games such as borrowing billions to buy back stocks, leveraged buyouts, and so on--all of which have reaped the insiders gargantuan fortunes while hollowing out the real economy. Financialization necessarily hollows out the real economy, as Gordon Long and I detail in this new video program: The Results of Financialization - Part I (34 minutes)

Forensic macroeconomic analyst Rob Kirby says few people have any idea how many “dark dollars” are out there. Kirby explains, “When you start talking about how many dollars there are in the world, nobody really knows. I would suggest to you the real quantity of dollars in the world is much greater than anyone imagines. A lot of these dollars are ‘dark,’ and they are held in the bowels of institutions like the Exchange Stabilization Fund (ESF). So, the world may be cruising along thinking the total number of dollars in the world is ‘X,’ but the true amount in the world, if you count the dark ones, might be three or four times ‘X’. This really means the money supply is much bigger than anyone understands or believes.” Kirby contends that the so-called “dark dollars” are being used to prop up the Treasury bond market. The ESF simply buys the debt and essentially hides it. ...

Precious metals futures rebounded Thursday, Sept. 7. Gold and silver scored their fourth set of gains in the last five sessions with the former notching a one-year high and the latter ending at its best price in more than 20 weeks.

Gold for December delivery tacked on $11.30, or 0.8%, to settle at $1,350.30 an ounce on the Comex division of the New York Mercantile Exchange. The close is the highest since Sept. 6, 2016 when prices ended at $1,354 an ounce.

The authors' thesis doesn't explain the 47-year downtrend of labor's share of the economy.

A provocative essay, Don't Blame the Robots, makes the bold claim that "Housing Prices and Market Power Explain Wage Stagnation." (Foreign Affairs) In other words, the stagnation of the bottom 95% of wages isn't caused by automation or offshoring, but by the crushingly high cost of housing: "Yet recent academic work in macroeconomics suggests that current wage stagnation has less to do with robots and more to do with real estate and market power. Real wage growth is a function of two things: changes in productivity and changes in the share of national output attributed to labor. If the share of GDP going to workers doesn’t change, then real wages simply track productivity."

In an economy in which wages for 95% of households are stagnant for structural reasons, pushing inflation higher is destabilizing.

The official policy goal of the Federal Reserve and other central banks is to generate 3% inflation annually. Put another way: the central banks want to lower the purchasing power of their currencies by 33% every decade. In other words, those with fixed incomes that don't keep pace with inflation will have lost a third of their income after a decade of central bank-engineered inflation. There is a core structural problem with engineering 3% annual inflation. Those whose income doesn't keep pace are gradually impoverished, while those who can notch gains above 3% gradually garner the lion's share of the national income and wealth.

That's the problem with fragility: everything looks fine on the surface until a crisis applies pressure. Then the whole rickety contraption collapses in a heap..

Life is inherently uncertain, but systems that were once considered certainties have increasingly become uncertain. Social Security is one example; recent polls reflect widespread doubts among Millennials and Gen-Xers that there will be any Social Security benefits left for them by the time they reach retirement age. This doubt is fact-based; as the number of retirees swells, as Medicare costs soar ever higher and the number of full-time jobs paying into Social Security/ Medicare stagnates, these pay-as-you-go programs break down; Social Security is already paying out billions more than it collects from employers and employees.

The signs are everywhere for those willing to look: something has changed beneath the surface of complacent faith in permanent growth. This is more intuitive than quantitative, but my gut feeling is that the economy just stumbled off a cliff. Neither the cliff edge nor the fatal misstep are visible yet; both remain in the shadows of the intangible foundation of the economy: trust, animal spirits, faith in authorities' management, etc. Since credit expansion is the lifeblood of the global economy, let's look at credit expansion. Courtesy of Market Daily Briefing, here is a chart of total credit in the U.S. and a chart of the percentage increase of credit. Notice the difference between credit expansion in 1990 - 2008 and the expansion of 2009 - 2017. Credit expanded by a monumental $40+ trillion in 1990 - 2008 without any monetary easing (QE) or zero-interest rate policy (ZIRP). The expansion of 2009 - 2017 required 8 long years of massive monetary/fiscal stimulus and ZIRP.

When the price of oil rises to the point of pain, just remember the handy-dandy discount mechanism: a much stronger US dollar. Glance at this chart of the trade-weighted U.S. dollar, and note the swing highs and lows in the price of oil per barrel around each peak and trough. You can look up historical inflation-adjusted prices of oil in USD on this handy chart: Crude Oil Prices - 70 Year Historical Chart (macrotrends.net)

Central banks already have their own funny-money that they can conjure into existence in infinite quantities. So why are these institutions of monetary crime openly expressing interest in cryptocurrencies?

Democracy (i.e. political influence) and ownership of productive assets are the exclusive domains of the New Aristocracy. I have often used the words neoliberal, neocolonial and neofeudal to describe our socio-economic-political status quo. Here are my shorthand descriptions of each term:

1. Neoliberal: the commoditization / financialization of every asset, input (such as labor) and output of the economy; the privatization of the public commons, and the maximizing of private profits while costs and losses are socialized, i.e. transferred to the taxpayers. 2. Neocolonial: the exploitation of the domestic populace using the same debt-servitude model used to subjugate, control and extract profits from overseas populations.

A disgraceful milestone was reached this week when US government debt busted through the $20 trillion level and quickly went over $20.1 trillion.

Can $21 trillion, or $25 trillion, be far ahead? Why not $40 trillion, so our grandkids and their grandkids can be even more indebted to the Chinese and other countries that buy our debt but aren’t very nice to us.

This isn’t the kind of milestone you celebrate or even want noticed. So you didn’t hear a peep about it from the White House or from Congress, which is responsible for our wanton spending.

Tonight I would like to show you some short and long term charts for some of the PM stock indexes. In the very short term they have had a good run and are getting overbought and need to work off some of the bullishness. This is perfectly normal and should be expected. What we need to focus in on now is where we should look for support to keep the uptrend intact. This first chart is a daily look at the HUI which shows us a one year support and resistance line. Two weeks ago already, the HUI broke above that very important S&R line telling us the bulls were in charge after the bears held resistance keeping the bull in check. Now we should look for that S&R line to reverse its role to what had been resistance, to now support. Critical support comes in around the 207 area which would be the backtest. The green circle shows where the 20 day ema crossed above the 50 day ema back in August for a buy signal.

Chinese gold demand this year, as represented by withdrawals from the Shanghai Gold Exchange (SGE), are currently 4.5% up on a year ago and if this margin is maintained through the remainder of the year, the full year figure could total around 2,050-2,060 tonnes as against 1,970 tonnes in 2016. However this would still be well down on the record 2015 year when SGE withdrawals totalled 2,596 tonnes for the full year. In the latest full month (August), SGE withdrawals came in at 161.41 tonnes compared with 144.44 tonnes during the same month a year ago. As we have pointed out before it is a contentious point as to whether SGE withdrawals are actually a measure of total Chinese gold demand.

China recently announced they will trade oil for yuan “backed” by gold. The story has gotten some press (none of it mainstream mind you), and many have questions as to what it really means. While quite complicated as a whole, when you break this down into pieces I believe it is a quite simple and logical end to Bretton Woods.

For a background, China has had an exchange open for about a year where gold can be purchased with yuan, though the volumes so far have been miniscule to this point. China has also been all over the world inking trade deals (in yuan) and investing in all sorts of resources from oil to gold to grains, they have made no secret about this. With the most recent example here. They have trade arrangements and treaties with Russia, Iran and many other non Western nations. They have also “courted” many Western nations privately (remember their meeting with the King of Saudi Arabia?) and actually lured many with their “Silk Road” plans via the AIIB which was huge news last year (but nearly forgotten by Americans at this point?). We also know China has been a huge importer of gold for the last 4-5 years and done so publicly via Shanghai receipts and deliveries. ...

The idea that authorities can massage their pumping to keep asset bubbles inflated at a permanently high plateau is currently being tested.

The trouble with inflating asset bubbles is that you have to keep inflating them or they pop. Unfortunately for the bubble-blowing central banks, asset bubbles are a double-bind: you cannot inflate assets forever. At some unpredictable point, the risk and moral hazard that are part and parcel of all asset bubbles trigger an avalanche of selling that pops the bubble. This is another facet of The Fed's Double-Bind: if you stop pumping asset bubbles, they pop as participants realize the music has stopped, and if you keep pumping them, they expand to super-nova criticality and implode. There are several dynamics at play in this double-bind.

There was a major development in a lawsuit last week that every investor should know about — and worry about.

But nobody is paying attention.

A New York federal judge appointed three law firms to serve as lead counsels in a multitrillion-dollar litigation accusing Goldman Sachs, Barclays Capital and 18 other financial institutions of rigging the market for US government securities.

This is a civil case, but there is also a federal criminal investigation into this matter that will probably go nowhere because there are so many Goldman Sachs alumni in the Trump administration...

Many of those about to be vaporized did not grasp the fragility of the "prosperity" they assumed was both solid and permanent. Business-cycle recessions are not just inevitable, they are necessary to flush bad debt and marginal investments/projects from the system.

The next recession--which I suggested yesterday has just begun--will be more than a business-cycle downturn; it will be a devastating meteor storm that destroys huge chunks of the economy while leaving other sectors virtually untouched. The dynamic that's about to play out is simple: wages for the bottom 95% have gone nowhere for 17 years, while costs have soared far above official inflation for everyone exposed to real-world costs. We have filled the widening gap between stagnant household income and rising expenses with debt. This stop-gap works for a while, but eventually the cost of servicing debt consumes the entire budget, leaving little to nothing to save or invest.

Hal's insight:

Click through for the rest. The system is starting to strain under the too many burdens.

A concocted public relations scheme – an event which resembled the annual Punxsutawney ground-hog viewing tradition – in which the Treasury Secretary emerges from Ft Knox and proclaims, “the gold is safe” does not provide any evidence whatsoever.

On cue, Jim Rickards followed up with a half-baked apology for the unwillingness of the U.S. Government to force a bona fide audit of the public’s gold being “safekept” in the Fed’s custody.

This is why I don’t read Rickards. I don’t know his deal is anymore. He was a front for the Pentagon’s goal to circulate the idea of the SDR replacing the dollar as the reserve currency. This is because they know the dollar is toast but the dollar is still the larges percentage share of the SDR so it still gives the U.S. control over the world’s reserve currency if it were to be the SDR....

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